Enron was once considered one of the largest company in the United States with reported revenues of over one hundred billion dollars. Given this fact, Enron was very appealing to job seekers. Enron’s code of ethics was based on respect, integrity, communication, and excellence. However, after the largest corporate bankruptcy in American history was reported which resulted in the disintegration of Enron, in which top executives walked away with a billion dollars and investors and employees lost almost everything, these ethical values were obviously broken. Enron’s corporate culture was money over morals which had a tremendous influence on employee’s ethical decision making as there was a huge imbalance in power and constant pressure to achieve profit. Adding value and generating profit was the only thing that mattered and employees were highly pressured into achieving higher and stricter performance metrics. To meet these extravagant goals, employees often worked 80 hours per week and over the weekend.
“When there are explicit pressures to achieve sales or profit goals this can promote unethical behavior, over-riding an employee’s intrinsic ethical values or personality characteristics, such as their level of Machiavelliansm, or tendency to manipulate situations for personal gain” (Boswell, 2018, p. 41). At Enron, corporate values were more predominant than individual ethical principles. Profits were the top priority at all costs. Therefore, breaking the rules, cheating, lying was acceptable and encouraged as long as profit was being generated. Top leaders were greedy, arrogant, and portrayed a lack of self-control. The culture at Enron portrayed the dark side of leadership in which leaders used leadership and power for personal gains. “The actions of the executives at Enron leading up to the collapse of the company shows us that they had a lack of integrity, insatiable ambition, arrogance, and reckless disregard for their actions. The executives displayed all of the dysfunctional personal characteristics that are found in destructive leaders (Fry, 2016, para. 4).
Even though Enron’s Code of Ethics involved principles such as respect, integrity, communication, and excellence, the company’s executives drastically failed to promote the use of these components. Trust, integrity and honesty lacked among the executives as greed, arrogance and intolerance were their main principles. Enron also lacked transparency in every possible operation which led to the development of profit before principle which also led to their destruction.
Leaders in today’s competitive business environment need to have a personal code of ethics that will guide them into acting ethically in their professional and personal decision making. The personal code of ethics should include the following components: relationships, honesty and integrity, work ethics, and transparency and disclosure of information, and fairness. Leaders must lead by example and having a personal code of ethics will be an excellent way of helping themselves into distinguishing between right and wrong, and thus, determining their daily actions, emotions, and behaviors. “A code of ethics is a guide of principles designed to help professionals conduct business honestly and with integrity” (Code of Ethics, 2018, para. 1).
Relationships whether between employees, or between employees and leaders must be based on the utilitarianism principle to weight the costs and benefits of ethical decisions and to evaluate every consequence. “The ultimate goal of evaluating consequences is admirable: to maximize benefits to as many people as possible (not just to yourself)” (Johnson, 2018, p. 158).
Leadership and employee relationships must be based on the following:
- Each employee is accountable for his/her own actions and must take full responsibility
- Dignity, respect, and inclusion are top priority when it comes to interactions and relationships; this includes and is not limited to: fellow employees, leaders, customers, investors, vendors, and competitors.
- Leaders must set an example by their own performance and behaviors.
- All employees’ primary obligation is to the customers, stakeholders and shareholders
- Customers’ demands must be serviced punctually and precisely.
- Employees may not receive any gift, tip, gratuity, or loan from any client, client’s family member or client representative, referral sources, or anyone who has an existing or potential business relationship with the organization.
Honesty and Integrity
Following Caux Round Table’s third principle: Build Trust by going beyond the letter of the law and Jerry White’s second biblical principle: “total honesty” will provide excellent guidance into acting with honesty and integrity. Caux Round Table’s third principle: Build Trust by going beyond the letter of the law emphasizes the importance of business behavior, mindfulness and “operating with candor, truthfulness, and transparency” (Principles of Business, 2003, para. 19). Similarly, Jerry White’s second biblical principle emphasizes the concept of total honesty. Jerry White states that “although you will frequently fail, our intent must be total honesty with our employer, our co-worker, our employees, and our customers’ (White, 1978, para. 2). Honesty and integrity are key elements to behavior in today’s competitive business environment as it will allow the creation of trust and loyalty among employees and leaders in organizations.
- Employees must perform their duties carefully, honorably, and in agreement with the best interest of the organization and its customers.
- Employees must not use their position, expertise, or power for personal gain.
“Work ethics include not only how one feels about their job, career or vocation, but also how one does his/her job or responsibilities. This involves attitude, behavior, respect, communication, and interaction; how one gets along with others” (What are Work Ethics, 2002, para. 1). A way leaders and employees can assure work ethics is by applying Jerry White’s biblical principles of “being servant” and “personal responsibility.” The business world needs more servant leaders who are willing to put the needs of others to help build a healthy and ethical work culture based on trust, collaboration, and service. “The value of a business is its service. How well it serves the needs of its customers will determine its success” (White, 1978, para. 6). Servant leaders focus on serving others. They are considered moral, empowering, passionate, and inspiring. Having servant leaders within an organization brings a positive impact on employees’ behavior and performance as employees get inspire into serving others as well.
In addition, Jerry White’s principle of personal responsibility will also assure a high level of work ethics within the workplace. “You must take full responsibility for your own actions and decisions. You should not try to excuse your actions based on pressure from within your business or organization to do what you know is not right” (White, 1978, para. 4). There is an important message behind this principle which is to never allow the world to shape us into its mold (White, 1978, para. 4). Employees and leaders must stay true to their principles by reporting unethical behavior and by never engaging into such behavior.
Transparency and Disclosure of Information
“Transparency is a new goal for many businesses, winning over shareholders, employees, and the general public. When a business is open about its operations, it can earn a level of trust that it wouldn’t have established otherwise” (Richman, 2016, para. 1). Being transparent when conducting business operations and disclosing accurate information is crucial for employees, leaders, the organization and society. Corrupt and fraudulent activities not only have an impact on the organization but those working for the organization, their families, and society as a whole. Therefore, applying Kant’s Categorical Imperative which emphasizes the need to do “what is morally right no matter the consequences” (Johnson, 2018, p. 159) will help to ensure transparency in business. In other words, leaders and employees must always be transparent and disclose accurate and truthful information even if that means disclosing unethical behavior. Fairness
Being fair when conducting business operations is crucial for businesses to succeed, gain respect and competitive advantage. An ethical principle to follow to ensure fairness is Caux Round Table’s first principle: Respect stakeholders beyond shareholders which emphasizes that responsible businesses must act reasonable and fair towards consumers, shareholders, and stakeholders (Principles of Business, 2003, para. 14). In addition, Jerry White’s first principle regarding just weight. In this principle White asks businesses to ensure they are providing customers what they are paying for. In other words, businesses should “give full quality for what is paid for and according to what is advertised” (White, 1978, para.1). Having accountability, mindfulness, and acting fair towards those that are being served, whether customers or business partners are crucial elements to ethical behavior.